Public Service Loan Forgiveness (PSLF) Program – A Guide

Updated on February 5, 2023

Learn about the Public Service Loan Forgiveness (PSLF) program, a federal initiative aimed at providing tax-free loan forgiveness for individuals in public service careers such as teaching, nursing, and military service. Get information on the PSLF Help Tool, COVID-19 pandemic temporary changes, limited waivers, permanent fixes, reconsideration, and eligibility for President Biden’s loan cancellation.

Questions Answered in this Article

What is the Public Service Loan Forgiveness (PSLF) program? A: The PSLF program is a federal initiative aimed at attracting individuals to careers in public service such as teaching, nursing, military service, etc. To be eligible for tax-free loan forgiveness, an individual must make 120 payments while working for the government or a nonprofit organization.
What is the PSLF Help Tool? A: The PSLF Help Tool is a tool on the federal student aid website that can be used to determine eligibility for the PSLF program based on loan type and employer.
How has the COVID-19 pandemic affected the PSLF program? A: Due to the COVID-19 pandemic, all federal student loans have been put in forbearance with no payments required until summer 2023. There is also a limited waiver of some provisions for counting payments with a one-year waiver expiring on Oct. 31, 2022, and an income-driven repayment waiver extending most provisions into summer 2023.
Who qualifies for the limited waiver of the PSLF program? A: Borrowers with Direct Loans, those who consolidated into a Direct Loan, and those who will consolidate into one by May 1, 2023, are eligible for the waiver. Grad PLUS and Parent PLUS loans are also eligible, with the parent who took out the loan required to work in a public service job.
What is the process for reconsideration of rejected PSLF applications? A: Starting April 2022, borrowers previously rejected for PSLF and Temporary Expanded PSLF can request an online review of their application at studentaid.gov. The borrower must still meet the payment and employment requirements under the law and the latest waiver. The review process may require additional information, and keeping the studentaid.gov account updated is recommended.

Understanding the PSLF Program and its Changes Due to COVID-19

The Public Service Loan Forgiveness (PSLF) program is a federal initiative aimed at attracting individuals to careers in public service such as teaching, nursing, military service, etc. To be eligible for tax-free loan forgiveness, an individual must make 120 payments (equivalent to 10 years of payments) while working for the government or a nonprofit organization. The PSLF Help Tool on the federal student aid website can be used to determine eligibility based on loan type and employer. The COVID-19 pandemic has resulted in temporary changes to the PSLF program. First, all federal student loans have been put in forbearance, with no payments required until summer 2023. Second, the Education Department has issued a limited waiver of some provisions for counting payments, with a one-year PSLF waiver expiring on Oct. 31, 2022, and an income-driven repayment waiver extending most provisions into summer 2023.

For those pursuing Public Service Loan Forgiveness (PSLF), the waiver expands the number of past payments that can be counted towards loan forgiveness, as long as the individual was employed by a qualified employer during repayment. To take advantage of these relaxed rules, individuals must apply for PSLF by May 1, 2023.

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Federal Loan Payment Pause for PSLF Seekers

The federal loan payment pause for PSLF seekers means that no payments are required until the extended automatic forbearance period ends in 2023, depending on the outcome of legal challenges to debt relief. As long as the individual is working full-time for an eligible employer, the months without payments will count towards the required 120 payments for PSLF.

In simpler terms, if no payments have been made since March 2020 and none will be made until August 2023, the individual is now three years closer to loan forgiveness.

Limited Waivers for PSLF Applicants

Under the limited waiver, any payments made towards federal loans, regardless of the repayment plan, will be counted towards PSLF. Previously, only payments made under specific repayment plans qualified. Payments made in the past that were rejected due to timeliness will now count toward PSLF.

Additionally, payments made on Federal Family Education Loan (FFEL) or Perkins loans after 2007 will now retroactively count towards PSLF, whereas previously, they did not. If loans were consolidated before the limited waiver period, payments made before consolidation would also count towards PSLF.

For military personnel, any active duty time will count towards PSLF, regardless of whether loan payments were paused during that time. If rejected, the Education Department will review PSLF applications, and the department will reach out to eligible borrowers who have not applied to inform them of the temporary rule changes.

If you seek relief through the waiver and encounter difficulty with your loan servicer, the Consumer Financial Protection Bureau suggests filing a complaint.

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Qualifying for PSLF under Limited Waiver Programs

The limited waiver covers borrowers with Direct Loans, those who consolidated into a Direct Loan, and those who will consolidate into one by May 1, 2023. Grad PLUS and Parent PLUS loans are also eligible for the waiver, with the parent who took out the loan required to work in a public service job. To benefit from the waiver, you must update your employment certification history, work for an eligible employer, and submit a PSLF form before May 1, 2023. For FFEL or Perkins loans, you must consolidate into a Direct consolidation loan and verify your employment before the deadline. Direct Loan holders must only verify their employment and submit a PSLF form.

Permanent Fixes for PSLF

The limited waiver applies only to past payments, but the education department has altered future payment policies, effective July 1, 2023. Borrowers who continue to meet the public service employment requirements can receive credit for late partial and lump sum payments and for the time spent in specific types of deferment or forbearance such as military service, economic hardship, or cancer treatment. Furthermore, qualifying public service employers can now certify employment for contractors.

Reconsideration for PSLF Applications

Starting April 2022, borrowers previously rejected for PSLF and Temporary Expanded PSLF can request an online review of their application at studentaid.gov. Any borrower who believes their application should be reconsidered may submit a request without providing additional documentation. However, more information may be requested during the review process. No deadline for submissions was specified.

The borrower must still meet the payment and employment requirements under the law, including the current waiver, which will count previously ineligible payments. To determine if your employer is eligible, you can use the PSLF Help Tool. If your employer is not suitable, you may provide documentation to support why the non-profit organization you work for should qualify.

It is unknown how long each submission will take to review, and it is recommended to keep your studentaid.gov account updated with the latest contact information to receive correspondence. Further details on reconsidering payment counts and employer qualifications can be found on the student aid website.

Are PSLF Applicants Eligible for Biden’s Cancellation?

Can PSLF applicants still receive Biden’s loan cancellation? Yes, borrowers with eligible loans pursuing PSLF can still receive loan cancellation under President Biden’s plan to cancel up to $20,000 in student loan debt for federal borrowers.

PSLF borrowers enrolled in an income-driven repayment plan will likely receive cancellation automatically as the Department of Education already has their income information. However, these borrowers may opt out if they have concerns about potential state tax implications. Borrowers not receiving automatic cancellations will need to apply for relief.

As of November 2022, 359,790 borrowers qualified for forgiveness through the year-long waiver of payment rules which expired on Oct. 31. Most of these borrowers have had their balances discharged, with an average balance of around $67,000. Only 12,527 borrowers have seen their loans discharged through the traditional PSLF process as of Oct. 31.

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To Obtain Public Service Loan Forgiveness

The Education Department intends to make many aspects of the PSLF waiver permanent, but several existing requirements will still apply.

Parent PLUS loan borrowers seeking PSLF must follow the current qualifications.

Have the Right Type of Loans or Consolidate Only federal direct loan program loans are eligible for PSLF, while private student loans are not.

You can consolidate other federal student loans, such as Federal Family Education Loan or Perkins loans, to make them eligible for PSLF.

If you qualify for Perkins loan cancellation, which offers forgiveness after 5 years of public service, choose that option and don’t consolidate your Perkins loans. You can still participate in PSLF with your other federal student loans.

Work Full-Time for a Qualifying Employer Eligibility in the program depends more on your employer than your work type. Qualifying employers can include government organizations at any level, 501(c)(3) nonprofits, AmeriCorps or Peace Corps, non-profit organizations that provide qualifying public services as their primary purpose, and religious organizations.

Complete an employment certification form to confirm your employer’s eligibility and send it to MOHELA Servicing, the department’s PSLF contractor. After processing, your loans will be transferred to MOHELA for servicing.

Submit a new form each year or whenever you change jobs to ensure you are on track for forgiveness. Although it’s not required, it’s a good idea to do so for your records. You can also apply for forgiveness once eligible and retroactively certify your employment.

To be eligible, you must work full-time for a qualifying employer, defined as a minimum of 30 hours per week. You may still be eligible if you work part-time for two qualifying employers and your combined hours average 30 hours per week.

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Switch to Income-Driven Repayment

If you can’t get a waiver, you must repay your loans on either the standard 10-year plan or one of four income-driven repayment plans. An income-driven program saves you the most money, but payments on graduated or extended plans typically don’t count for Public Service Loan Forgiveness (PSLF). However, these payments may still qualify under the Temporary Expanded Public Service Loan Forgiveness program. To be eligible for PSLF, you must make 120 monthly loan payments, which must be full, on time, after Oct. 1, 2007, while working full-time for a qualifying employer. Payments made during school, deferment, forbearance, grace period, delinquency, or default don’t count. You can change jobs and make lump-sum payments, but only payments while working for a qualifying employer count. To apply for PSLF, apply with employment certification forms and don’t make payments while the application is being processed.

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Don’t qualify for PSLF? You Have Other Options

If you don’t meet the criteria for PSLF, don’t worry, you have other options. Look into other federal loan forgiveness programs, but beware of scams. You can also keep repaying through an income-driven plan, which will forgive your remaining balance after 20 or 25 years, but the discounted amount is taxable. Lastly, consider refinancing to lower your interest rate and become debt-free faster, but remember that refinancing federal loans makes them ineligible for forgiveness programs or income-driven repayment. Hence, you need stable finances and good credit to qualify.

Summary

The Public Service Loan Forgiveness (PSLF) program offers tax-free loan forgiveness to individuals working in public service (teaching, nursing, military, etc.).
To be eligible, an individual must make 120 payments (10 years) while working for a government/nonprofit.
The COVID-19 pandemic has temporarily changed the PSLF program: all federal loans are in forbearance until 2023 and a limited waiver has been issued for counting payments.
The waiver expands the number of past payments counted towards loan forgiveness as long as a qualified employer employed the individual during repayment.
Individuals must apply for PSLF by May 1, 2023, to take advantage of the relaxed rules.
Federal loan payment pause for PSLF seekers means no payments are required until 2023, and months without payments will still count towards the required 120 costs.
Under the limited waiver, all payments towards federal loans will count towards PSLF, regardless of the repayment plan. Payments made on FFEL or Perkins loans after 2007 will now count towards PSLF, and active duty time for military personnel will count towards PSLF.
The limited waiver covers borrowers with Direct Loans, Grad PLUS, and Parent PLUS loans, with the latter required to work in a public service job.
Borrowers must update their employment certification, work for an eligible employer, and submit a PSLF form before May 1, 2023, to benefit from the waiver.
Permanent fixes for PSLF have been altered starting July 1, 2023, and late payments, time spent in deferment/forbearance, and certification of employment for contractors are now eligible.
Rejected PSLF and Temporary Expanded PSLF applications can be reviewed starting April 2022 by submitting a request online at studentaid.gov.
PSLF applicants are still eligible for Biden’s loan cancellation, up to $20,000 in student loan debt for federal borrowers.
PSLF borrowers enrolled in an income-driven repayment plan will likely receive cancellation automatically but may opt-out.